http://stockcharts.com/h-sc/ui?c=$NYAD,uu600,530daulnnmyp

HOWEVER, breadth sucks. shows we have not bottomed yet:

http://stockcharts.com/charts/gallery.html?$NYAD

I’m not willing to stake my life on it, either. I also understand that you can never tell people that you are rigging a card game. Confidence in a system is essential to making it work, and I don’t necessarily believe that nudging confidence here and there is evil. And hey, the September pop gave long investors the best exit point they’ll see for a long time (which I thought was nice).

I think what bothers me most is the string of statements from Hank, Ben, Chris, and Walter. Either they are extremely stupid men (which I don’t believe… well, maybe Cox), or they’ve been lying. The media has failed to run them through the ringer for either incompetence or dishonesty, meaning said journalists are either incompetent or dishonest. Given how poorly they’ve all performed, they’ve lost the right to criticize any “crazy” idea tabled. When I see people like this scrambling to dismiss anything as “nonsense”, I’m very inclined to believe it.

And I totally agree with you about the natural order of things. What scares me is I think you can make things even worse than they might have been otherwise.

I’m not sure I can agree with you about the PPT existing in the form of buying SP futures…but nothing would surprise me.

But I will agree with you that governments actions in front of options expiration is amazing. It seems that there are forces at work to create very short term rallies in front of major options expiring. Also, I’m fairly certain there is someone “high up” employing Elliot Wave analysis at various points during the down drops. The most governmental interference came in the beginning stages of this move, almost as if they were attempting to prevent some Wave Threes from occuring or fully developing.

For instance on 1/23 and 3/17, there was definitely some actions taken to prevent a full move from occuring….and then most notably on 9/18, with the announcement of RTC II and the short selling ban. On 9/18 we were definitely in the middle of “third of third” wave down…then BAM, Charlie Gasparino is on TV “Breaking News.”

In turns out that no amount of governmental interference can stop the natural order of things. All they did on 9/18 was create further subdivision and a more dramatic decline later on.

- AT

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What I see in this is analogous to the screech when a mike gets too close to the speaker. Sometimes it is just unpleasant but it is sometimes destructive of the speaker cone or amplifier components if it is allowed to grow too loud or go on unchecked for too long. Even if not destructive, it is usually beneficial to stop the ringing so that the sound system can return to “normal” function (even thought the ringing is also a normal characteristic of such systems).

To correct the deafening screech, one must either move the mike away from the speaker (reduce the feedback coupling) or turn down the amplifier (increase the loss in the feedback loop) or change the time response (add delay) in the system.

If the analogy of amplifier feedback system analysis holds, in the economic feedback system of the stock market, to correct this ringing (price volatility), the system must have a loss and or delay introduced to prevent excessive instability. This solution is simple in concept but it is very difficult in the complexity of real world politics to make such an adjustment. Here are a couple of approaches that could be considered (many others or variants could be defined).

First one could introduce or increase the losses in the trading system. A small transaction fee (tax), for example, would change the economic incentive for computerized scalping and slow down the rapid churning of the market. While this would change the short term return, it would have little effect on longer term profits or losses based on fundamental business characteristics of the market. While I am generally against losses and taxes, it is a small price to pay for increased stability and the reduced damage that the current instability causes. The funds could be used by the SEC or other government agencies to do a better job of regulating the illegal but difficult to identify practices of naked shorting, pumping or manipulating prices by the “big boys,” etc.

Second one could introduce a delay in the trading system. I this case no fee would be required but one would just require a longer holding period. For example any purchase of an equity, option, derivative or bond simply could not be sold for an appropriate period of time regardless of market conditions. For example, a “scalping” transaction might require a holding period of say 2 days before it could be sold or covered by a derivative or option.

I can only imagine the turmoil and flames that would result if such proposals were introduced by someone with an ability to carry them out (as in Washington). The planes from N.Y. to Washington would be full of lobbyists, bankers and hedge fund managers trying to dissuade the congress or SEC from such actions.

So folks, if you don’t like the solution, don’t blame the messenger … just enjoy the turbulence in what’s left of the system this volatility destroys. No need to jump on me … I’m JustOne with little influence.

Do you mean the government website that tallies how many billions these clowns pissed away trying to paint the tape? January 22, 2008 was shaping up to be another Black Tuesday, remember? September 19, 2008 – SEC gives financials a completely bogus pop on options expiration day. They stole from people, yet no one even bothered to complain.

“Subprime seems contained”
“Our banking system is strong”
“I need $700B or the world’s gonna end”

We may as well have put Abbot and Costello in charge. They thought they could manage this crisis and no one would be any the wiser. I am sure they thought they could unwind these trades at a profit (that’s the idea behind painting the tape). This is a confidence game to them (like three-card-monte), and quite frankly, they’d have been derelict in their duties, if they didn’t try just manipulating markets before initiating an alphabet soup of rescue plans.

And chicks dig guys in tin-foil hats.

Painting the tape, done correctly, is a profitable trade. Unfortunately, this administration